The real reasons you can't save

If you suspect some sneaky Jedi mind tricks are beating your efforts to save, you're on the money.

Australia's soaring household debt, the largest of any advanced economy excluding Switzerland, shows that saving doesn't come easily to a lot of us.

The truth is humans are hard-wired to favour immediate gratification over long-term goals, and that can make saving tricky, even if we earn enough to be able to conserve cash.

Professor Robert Slonim heads the Australian federal government unit tasked with testing how behavioural economics can deliver better public policy.

The approach is not new, with the British government leading the field when it established a behavioural insights team, known as the nudge unit, seven years ago.

Professor Slonim says the main psychological barrier people face when attempting to save is a bias towards short-term rewards over longer term pay-offs - a phenomenon called present bias.

"We tend to focus a lot of our attention and energy in the benefits we receive in the present and we tend to discount very heavily what's happening in the future," he said.

"We see this with savings and with many other decisions."

When faced with the choice of getting $20 now or $30 next week, most people will opt for the immediate, but lesser, reward.

Prof Slonim said pre-committing to saving can help combat an ingrained present bias.

Pre-committing to automatically send part of your pay packet into a separate account is likely to deliver a better result than deciding in each pay cycle whether or not to put some cash aside.

Enlisting the help of friends or family to keep you accountable with saving might also help keep you on track.

The Behavioural Economics Team of the Australian Government (BETA), headed by Prof Slonim, will this year test the impact of a motivational reminder SMS and email on around 24,000 consumers.

Loss aversion

Prof Slonim said social norms can also have an impact, citing the example of a consumers' energy consumption being influenced by knowing how much power their neighbours are using.

"It's quite possible that in the savings context that this could also be the same; if you know other people around you are saving then that could be something that tells you I should be saving also," he said.

Loss aversion is another common psychological factor that motivates human behaviour.

Studies have shown we are much more focused on avoiding loss than aiming for future gain, and the way the concept of saving is framed can have an impact on financial decisions.

Dan Goldstein, the principal researcher at Microsoft Research, published a study in 2011 that demonstrated how showing people computer-generated images of their aged selves can impact their present savings decisions.

So thinking about losing what you currently have might motivate you to start saving for the future.